Thursday, 29 January 2009

EU Law: Trade policy

A military worm, a diplomatic midget, but a trade giant. A ‘Global Europe’ of shopkeepers offers some consolation for the European Union in a hard world.

The customs union and the common commercial policy are among the most uniform policy areas of the European Union, and the Lisbon Treaty would modernise the scope of trade, at least formally.

Member states’ protective interests and the unanimity rule make the Lisbon Treaty a more qualified success than would appear at a first glance.






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Current treaty

The uniform principles mentioned in paragraph 1 are important foundations of the common commercial policy and they turn the Commission into an important player on the scene of world trade relations.

But the caveats and exceptions are almost as important as these first principles.

When the Commission opens negotiations on, for instance a new WTO round (Doha), the Council issues the (tight) mandate for the negotiations. The Commission is then watched every step of the way by the so called 133 Committee, manned by the member states (paragraph 3).

(Outside the scope of legal analysis, it would be interesting to assess how much of the failure of the WTO Doha round is imputable to EU member states’ intransigence with regard to agricultural protectionism.)

The qualified majority voting (paragraph 4) is hemmed in by notable exceptions deriving from the fifth and sixth paragraphs, where unanimity makes progress unlikely.

Article 133 of the Treaty establishing the European Community (TEC) is the central provision on the common commercial policy, published in the latest consolidated version of the treaties OJEU 29.12.2006 C 321 E/104–105:


Article 133 TEC

1. The common commercial policy shall be based on uniform principles, particularly in regard to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies.

2. The Commission shall submit proposals to the Council for implementing the common commercial policy.

3. Where agreements with one or more States or international organisations need to be negotiated, the Commission shall make recommendations to the Council, which shall authorise the Commission to open the necessary negotiations. The Council and the Commission shall be responsible for ensuring that the agreements negotiated are compatible with internal Community policies and rules.

The Commission shall conduct these negotiations in consultation with a special committee appointed by the Council to assist the Commission in this task and within the framework of such directives as the Council may issue to it. The Commission shall report regularly to the special committee on the progress of negotiations.

The relevant provisions of Article 300 shall apply.

4. In exercising the powers conferred upon it by this Article, the Council shall act by a qualified majority.

5. Paragraphs 1 to 4 shall also apply to the negotiation and conclusion of agreements in the fields of trade in services and the commercial aspects of intellectual property, in so far as those agreements are not covered by the said paragraphs and without prejudice to paragraph 6.

By way of derogation from paragraph 4, the Council shall act unanimously when negotiating and concluding an agreement in one of the fields referred to in the first subparagraph, where that agreement includes provisions for which unanimity is required for the adoption of internal rules or where it relates to a field in which the Community has not yet exercised the powers conferred upon it by this Treaty by adopting internal rules.

The Council shall act unanimously with respect to the negotiation and conclusion of a horizontal agreement insofar as it also concerns the preceding subparagraph or the second subparagraph of paragraph 6.

This paragraph shall not affect the right of the Member States to maintain and conclude agreements with third countries or international organisations in so far as such agreements comply with Community law and other relevant international agreements.

6. An agreement may not be concluded by the Council if it includes provisions which would go beyond the Community's internal powers, in particular by leading to harmonisation of the laws or regulations of the Member States in an area for which this Treaty rules out such harmonisation.

In this regard, by way of derogation from the first subparagraph of paragraph 5, agreements relating to trade in cultural and audiovisual services, educational services, and social and human health services, shall fall within the shared competence of the Community and its Member States. Consequently, in addition to a Community decision taken in accordance with the relevant provisions of Article 300, the negotiation of such agreements shall require the common accord of the Member States. Agreements thus negotiated shall be concluded jointly by the Community and the Member States.

The negotiation and conclusion of international agreements in the field of transport shall continue to be governed by the provisions of Title V and Article 300.

7. Without prejudice to the first subparagraph of paragraph 6, the Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament, may extend the application of paragraphs 1 to 4 to international negotiations and agreements on intellectual property in so far as they are not covered by paragraph 5.






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Original Lisbon Treaty

Article 2, point 112 of the original Lisbon Treaty (ToL) rearranged the Title on the common commercial policy, renumbered two and repealed two Articles (OJEU 17.12.2007 C 306/80):

TITLES WHICH ARE TO BE MOVED

112) Title IX ‘COMMON COMMERCIAL POLICY’ shall become Title II in Part Five on the Union's external action and Articles 131 and 133 shall become Articles 188 B and 188 C respectively. Article 131 shall be amended as set out below in point 157 and Article 133 shall be replaced by Article 188 C.

Articles 132 and 134 shall be repealed.


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Article 2, point 158 of the original Lisbon Treaty presented the wording of the new Article 188c of the Treaty of the Functioning of the European Union (OJEU 17.12.2007 C 306/92–93):


158) An Article 188 C shall be inserted, replacing Article 133:

‘Article 188 C

1. The common commercial policy shall be based on uniform principles, particularly with regard to changes in tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and services, and the commercial aspects of intellectual property, foreign direct investment, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies. The common commercial policy shall be conducted in the context of the principles and objectives of the Union's external action.

2. The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall adopt the measures defining the framework for implementing the common commercial policy.

3. Where agreements with one or more third countries or international organisations need to be negotiated and concluded, Article 188 N shall apply, subject to the special provisions of this Article.

The Commission shall make recommendations to the Council, which shall authorise it to open the necessary negotiations. The Council and the Commission shall be responsible for ensuring that the agreements negotiated are compatible with internal Union policies and rules.

The Commission shall conduct these negotiations in consultation with a special committee appointed by the Council to assist the Commission in this task and within the framework of such directives as the Council may issue to it. The Commission shall report regularly to the special committee and to the European Parliament on the progress of negotiations.

4. For the negotiation and conclusion of the agreements referred to in paragraph 3, the Council shall act by a qualified majority.

For the negotiation and conclusion of agreements in the fields of trade in services and the commercial aspects of intellectual property, as well as foreign direct investment, the Council shall act unanimously where such agreements include provisions for which unanimity is required for the adoption of internal rules.

The Council shall also act unanimously for the negotiation and conclusion of agreements:

(a) in the field of trade in cultural and audiovisual services, where these agreements risk prejudicing the Union's cultural and linguistic diversity;

(b) in the field of trade in social, education and health services, where these agreements risk seriously disturbing the national organisation of such services and prejudicing the responsibility of Member States to deliver them.

5. The negotiation and conclusion of international agreements in the field of transport shall be subject to Title V of Part Three and to Article 188 N.

6. The exercise of the competences conferred by this Article in the field of the common commercial policy shall not affect the delimitation of competences between the Union and the Member States, and shall not lead to harmonisation of legislative or regulatory provisions of the Member States insofar as the Treaties exclude such harmonisation.’.


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Consolidated Lisbon Treaty

Article 188c and the referrals were renumbered in the consolidated version of the Treaty of Lisbon. Even if the rest of the wording is the same as above, we present the latest version for ease of reference in the form it will be read by students and practitioners, if the Lisbon Treaty enters into force (OJEU 9.5.2008 C 115/140–141):

Article 207 TFEU
(ex Article 133 TEC)

1. The common commercial policy shall be based on uniform principles, particularly with regard to changes in tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and services, and the commercial aspects of intellectual property, foreign direct investment, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies. The common commercial policy shall be conducted in the context of the principles and objectives of the Union's external action.

2. The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall adopt the measures defining the framework for implementing the common commercial policy.

3. Where agreements with one or more third countries or international organisations need to be negotiated and concluded, Article 218 shall apply, subject to the special provisions of this Article.

The Commission shall make recommendations to the Council, which shall authorise it to open the necessary negotiations. The Council and the Commission shall be responsible for ensuring that the agreements negotiated are compatible with internal Union policies and rules.

The Commission shall conduct these negotiations in consultation with a special committee appointed by the Council to assist the Commission in this task and within the framework of such directives as the Council may issue to it. The Commission shall report regularly to the special committee and to the European Parliament on the progress of negotiations.

4. For the negotiation and conclusion of the agreements referred to in paragraph 3, the Council shall act by a qualified majority.

For the negotiation and conclusion of agreements in the fields of trade in services and the commercial aspects of intellectual property, as well as foreign direct investment, the Council shall act unanimously where such agreements include provisions for which unanimity is required for the adoption of internal rules.

The Council shall also act unanimously for the negotiation and conclusion of agreements:

(a) in the field of trade in cultural and audiovisual services, where these agreements risk prejudicing the Union's cultural and linguistic diversity;

(b) in the field of trade in social, education and health services, where these agreements risk seriously disturbing the national organisation of such services and prejudicing the responsibility of Member States to deliver them.

5. The negotiation and conclusion of international agreements in the field of transport shall be subject to Title VI of Part Three and to Article 218.

6. The exercise of the competences conferred by this Article in the field of the common commercial policy shall not affect the delimitation of competences between the Union and the Member States, and shall not lead to harmonisation of legislative or regulatory provisions of the Member States in so far as the Treaties exclude such harmonisation.


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Comment

The new monster Article 207 TFEU includes both the whole scope of foreign trade policy, the plethora of instruments and the procedures. Most of the contents are taken over from the current Article 133 TEC, but Article 207 TFEU is more readable.

If there are improvements, they derive from Article III-315 of the Constitutional Treaty, of which Article 207 TFEU is an almost exact copy.

The scope of trade policy is widened by mentioning trade agreements in relation to and services, and by including the commercial aspects of intellectual property, as well as foreign direct investment (paragraph 1). The unanimity rule in paragraph 4 does much to dampen expectations.

The ordinary legislative procedure strengthens the role of the European Parliament and the legitimacy of the trade policy framework (paragraph 2). The European Parliament (committee) is now given the formal right to be informed about international trade negotiations (paragraph 2).


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Further reading

Here are some suggestions for interested readers.


UK House of Lords, European Union Committee: Current Developments in European Trade Policy (HL Paper 8, published 28 November2007)


UK House of Lords, European Union Committee: Developments in EU Trade Policy (HL Paper 200, published 5 December 2008)


Stephen Woolcock: The potential impact of the Lisbon Treaty on European Union External Trade Policy (European Policy Analysis, June Issue 8-2008; Sieps – Swedish Institute for European Policy Studies)


Stormy Mildner: Die Doha-Runde der WTO – Stolpersteine auf dem Weg zu einem erfolgreichen Verhandlungsabschluss (SWP-Studie, Januar 2009)


Ralf Grahn